Short-term, long-term, and the threshold that matters
Capital-gains tax depends on two things: how much you gained and how long you held the asset. Sell within the threshold and the gain is taxed at your ordinary income rate; hold past it and a much lower long-term rate applies. That single line can be worth a substantial amount — which is why this tool puts both treatments side by side and tells you what waiting is worth.
How the tax is figured
gain = (sale − purchase) × shares · tax = gain × rate
The rate used is your long-term rate once the holding period reaches the threshold, otherwise your short-term rate. On a loss, the tax is zero. The annualized after-tax return compounds your after-tax gain over the holding period into an equivalent yearly figure.
What makes this calculator different
- Short vs long, side by side. Most tools multiply your gain by one rate. We show the tax under both treatments and the exact dollars long-term status saves you.
- The “almost there” nudge. If you’re short-term but close to the threshold, we tell you how many more months to hold — and what it’s worth.
- After-tax annualized return. The number that actually lets you compare this position against other investments, net of tax.
- Any jurisdiction. You enter the rates and the threshold, so it works wherever you are.
Frequently asked questions
What’s the difference between short-term and long-term capital gains?+
Short-term gains come from assets held for a year or less and are usually taxed at your ordinary income rate — often much higher. Long-term gains come from assets held beyond the threshold (12 months in the US) and qualify for a preferential, lower rate. The gap between the two is exactly what this calculator quantifies: it shows the tax under each treatment and the dollars you save by crossing the long-term line.
How does the holding period work?+
The holding period is the time between when you acquired the asset and when you sold it. Once it reaches the long-term threshold — 12 months in the US, though you can change it here for other jurisdictions — the entire gain on that lot is taxed at the long-term rate. If you’re close to the threshold, the calculator flags how many more months you’d need to hold to qualify and what it would save.
What is tax-loss harvesting?+
When you sell an asset for less than you paid, the loss can generally be used to offset capital gains elsewhere in your portfolio, and a limited amount of ordinary income, reducing your overall tax bill. Deliberately realizing losses to offset gains is called tax-loss harvesting. This calculator flags a loss and charges no tax on it, but it does not compute a refund or carry-forward — those depend on your full tax picture and local rules.
What counts as my cost basis?+
Cost basis is generally what you paid to acquire the asset, including commissions and fees. Here we use purchase price per share times the number of shares. In practice, basis can be adjusted by reinvested dividends, stock splits, wash sales, or inherited/gifted step-ups — so your broker’s reported basis is the figure to rely on at filing time.
Is this tax advice?+
No. This calculator is an educational estimate. Real capital-gains taxation involves brackets, thresholds, surtaxes (such as the US net investment income tax), state and local taxes, and rules that vary by jurisdiction and change over time. Because you enter the rates yourself, it works anywhere — but always confirm the specifics with a qualified tax professional.
Disclaimer: This calculator is for educational purposes only. Capital-gains rates, thresholds, surtaxes, and rules vary by jurisdiction and change over time, and your actual liability depends on your full tax situation. It is not tax or financial advice.